RTO Mandates: Hard Truths for Leaders

When you force employees back to the office, do you drive away your top talent? While some CEOs impose strict return-to-office mandates in the name of productivity, industry research tells a troubling story about the results. Today, we're joined by MIT SMR columnist Brian Elliott, whose provocative analysis of return-to-office policies became one of our most popular articles this year. Drawing from new data and real-world examples, Brian reveals why RTO mandates often backfire and what successful leaders are doing instead. In this conversation, he shares evidence-based strategies you can use to boost productivity and retention at the same time.

Brian, you wrote an article for MIT SMR in March stating that RTO mandates did not deliver a productivity boost or financial performance gain. Does the latest research data support that claim? Yes, it does. It's been a really interesting few months because, for a while, it seemed like this topic was calming down a bit. However, what has happened since is that things have heated up again.

So back in March, when I wrote that article, one of the studies I discussed was from Mark Ma of the University of Pittsburgh. It stated that firms that implemented mandates showed no financial performance benefit over the ensuing year. However, it did have a knock-on effect on employee engagement. Since then, Nick Bloom released a study in Nature indicating that hybrid work is equally productive, based on measurements taken from one company, but had a very positive effect on employee retention compared to being full-time in the office. Additionally, a combined study from professors at Cornell and the University of Utah analyzed financial performance and found that there was not even a stock market benefit.

Some CEOs, I think, are expecting to get a pop, with Wall Street rewarding them for being tough on employees. It turns out that doesn't happen either. There have also been studies from both McKinsey and BCG showing that firms that are more flexible actually result in higher revenue growth. It's a bit like the unilateral CEO who insists that this is the way they want the company to work, yet does not receive financial rewards for it.

Top-down decision, little reward. Top-down decision, little reward. Top-down decision, little reward. No reward, leading to negative consequences for their employees. In the long term, we will see.

How This Plays Out: Interesting Data Amazon recently imposed a strict return-to-office mandate for its employees that will take effect in January 2025. Dell recently ordered its sales staff in the Austin area to return to the office immediately. Employees quickly began voicing their displeasure about these decisions online.

Yes. Why is there such a continuing disconnect between the CEOs and the employees on this issue? It is a shame that there is such a disconnect because we tend to polarize this into either everyone wanting to be in the office full-time or working remotely full-time, when the vast majority of people actually want regular time together with their teams. We can revisit how to make that happen. However, these disconnects can be quite fundamental at times.

What you're seeing is some CEOs who are making decisions based on what they think is right for an entire company— a large-scale organization that is distributed across multiple locations and functions around the globe. That person may have a lot of time and be making that decision based on what was right for them as they grew up and went through the system, what made them successful. They often forget that they may not reflect what the rest of their employee base looks like, particularly in terms of caregiving responsibilities. However, there are ways to approach this that other firms have successfully figured out: Don’t centralize decision-making at the executive level to create a unitary, one-size-fits-all decision, but also don’t leave it to individual chaos. Business units, functions, and teams are the right places to put those decisions.

If you get a team working together and discussing why they should come together, you will likely see a higher level of satisfaction and engagement, according to research conducted by BCG. Additionally, when employees feel involved in the conversation, they perceive themselves as trusted contributors in the problem-solving process. You also mentioned that return-to-office (RTO) mandates are a surefire way for companies to lose their top performers. Why are high performers more likely to leave after these forced returns to the office?

Yes. High performers, as indicated by research conducted by various researchers and studies from Gartner, are more likely to leave their organizations if they have been frequently promoted. Additionally, individuals who have been with an organization for a longer period, according to another academic study, are also more likely to leave under a mandate. One part of the reason for this trend is that these individuals are highly marketable.

Sure. These are the most talented people inside an organization, right? They're the ones who have the ability to find a job more easily because they are your top performers. But there's another reason behind this. Sometimes this is being done because senior executives say, "Look, I'm worried that there's a part of my population that's not working hard enough."

I had one executive say to me, "I don't know that they're walking the dog four hours a day, but I do know that if they're in the office, they can't be walking the dog four hours a day." What you're saying to those top performers is, "I don't trust you." There's a causal relationship between commands and policies and the reactions that top performers have. Upwork released a study this summer in which 63% of the executives they polled who implemented mandates reported that their firms disproportionately lost women. In most cases, this had a knock-on effect on the productivity of the firm because they couldn't replace those employees quickly enough.

If we fast forward to January 2026, Amazon has implemented this forced return to the office. What will they have gained and lost? They will have lost a significant amount of their top talent. Will this be enough to impact Amazon?

Time will tell. It's a very large company, and it can do quite well. Even when they implemented a three-day-a-week mandate and asked teams to co-locate with their organizations, I know of firms that started cherry-picking people from Amazon, right? Because individuals were looking for a place that felt like it wouldn't break the promises made to employees and were seeking a new place to land. So, there will be some attrition that happens.

Over the course of this discussion, you're also going to see something that's a little bit more insidious: people trudging back into the office just to punch the clock. Literally, there are Amazon employees who have mentioned this on online forums. They say things like, "I'm just going to punch the clock until I find another role at another company," and maybe that takes them a year.

Maybe their performance flags enough that Amazon gets rid of them. However, that lag in performance is not something anyone should welcome or find attractive in an organization. Another issue that will arise is non-compliance. If you look at some of the other research available, even when a policy is put in place, compliance often remains below 50%. We all understand the reasons for this.

A mandate and a policy from the top result in a conversation that every manager dreads. When these issues arise, there are two weeks of extremely low productivity while you sort things out with your boss. A key question during this time is, "How does this apply to me?" and "Will you actually crack down on people?" You may enforce strict measures on certain individuals or areas of the organization that you're trying to shrink, but you'll likely be more lenient with your top performers in key roles that you need to retain, as you can't afford to lose them. At this point, you're not an executive making decisions without understanding the ramifications; some employees are bound to leave voluntarily. In some ways, this situation can be seen as a soft layoff.

About a third of HR executives who were polled earlier this year said that mandates are a form of soft layoff. Culture change is some of the hardest work that leaders have to do. What first steps do you suggest for a leader who wants to help their organization move from a culture of measuring productivity via face time to measuring productivity via outcomes? Yes, the first thing is that you need to know what outcomes you're trying to measure, right? I've actually seen this in organizations.

It's really hard. There's an executive wrestling match that needs to happen regarding which goals are most important to us, what our priorities are, and how we are going to articulate these in measurable ways. If you put people in a position where what you're saying to them or signaling to them is that what matters to me is whether or not you're showing up and your activity, it becomes challenging.

How many hours a day are you in the office? How many hours a day is your green light on, indicating that you're active online? Then, people will perform to that metric, right? That means you're not getting them focused on the outcomes. The reason they're doing that is that you're not giving them the trust to actually deliver against the problems they're facing.

That's a doom loop, right? I'm monitoring your activity; therefore, you don't trust me. Consequently, I'm not going to focus on the root cause at hand; I'm just going to sort of punch the clock, and performance will degrade. And it keeps going around and around. If, instead, we can have that conversation about what the goals and outcomes are, how we actually measure people at the team level against that, and in some cases at the individual level, how we hold people accountable for performance—not just activity.

What you're saying is, “I trust you to achieve the outcome. I'm going to give you more degrees of freedom and latitude to get there, but I expect you to actually perform, right?” That's really important in terms of lifting their levels of engagement. You're boosting trust, and they actually perform better, which aligns with the organization's goals overall. It's a positive boom loop instead of a negative doom loop. Many of us felt that during the pandemic; we proved it could work. Yes.

Measuring outcomes is important. Many organizations have made significant investments in this area. I've worked with and spoken to a number of organizations that have acknowledged that this has highlighted their previous lack of measurement practices. They were relying on management by walking around, which is, honestly, the weakest approach.

Form of management for performance, right? I need to actually measure people based on their performance. It takes work and effort to implement these systems. So, Brian, if I’m a leader, what is the one key takeaway you want me to take away from your research on RTO mandates? The number one question that I ask leaders when they're contemplating an RTO mandate or becoming more stringent about it is: What problem are you trying to solve?

Let's get specific about what the problem is. If the problem is innovation or productivity, can we define what we mean by innovation or productivity? Can we find ways to engage people in identifying what the solution might be? An RTO mandate simply removes one degree of freedom in how you address the issue, right?

Right, you have to figure out from a systemic perspective what’s getting in your way. If it’s a lack of innovation, are you listening closely enough to the field? Are you understanding what your customers are saying? Are you aware of what your competitors are doing? Are you allowing the voices of dissent in your own organization to bring forward unconventional ideas? Trust and psychological safety are a bigger deal when it comes to innovation than whether or not people are co-located.

If it's productivity, where is the lack of productivity? How do we define it? What might be getting in people's way? If our sales teams are slowing down, do they have too big a bag of tricks? Have we done insufficient training?

Have we not skilled up the junior staff and made them capable? Those are more productive conversations because not only are you thinking about the answers yourself, but you also have to involve your people in the discussion. Control will not work very well, especially as we enter a world powered by AI and other capabilities. You can't keep up. You can't command and control your way out of the future.

Brian, thanks so much. Laurie, thank you. It's been great chatting with you. We hope you found Brian's insights valuable. For a deeper dive, check out his full article, "Return to Office Mandates: How to Lose Your Best Performers," on the MIT Sloan Management Review's website.

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